The Bureau of Internal Revenue (BIR) is expecting to collect a windfall in income tax from world boxing champion Manny Pacquiao from his WBO welterweight title fight with American Chris Algieri in Macau because the venue is a tax-free haven.
The tax savings that the Sarangani congressman got from Macau bout will be included in his taxable income, a senior revenue official said yesterday.
The official, who declined to be named, placed Pacquiao?s possible tax remittance at roughly P200 million. That comes from his $20 million guaranteed prize money plus earnings from related sources such as pay-per-view estimated to reach more than P1 billion.
The official based the estimates in computing the taxes due on Pacquiao?s earnings either on the 40 percent optional standard deduction, or the itemized schedule and subjecting the net taxable income to the maximum 32 percent income tax bracket.
The tax ceiling is imposed on individuals with annual net taxable income of P500,000 and more.
Macau is one of China?s special administrative regions similar to our special economic zones where businesses located there are granted preferential tax treatment to encourage foreign investments, the BIR official said.
The official said the Macau government probably collected minimal license and permit fees from the organizer of the fight.
He explained that if the fight were held in the US, the BIR would be collecting much lower because the US Internal Revenue Service (IRS) would claim its share which is automatically deducted from the income tax payments here. That is due to a bilateral tax treaty agreement between Manila and Washington.
The Philippines has some 40 tax treaty accords with various countries, mostly in Asia and Europe.
The same source said Pacquiao?s income from the fight and commercials in Macau are not covered by value-added tax (VAT) because it was earned abroad.
Records show that Pacquiao paid the BIR more than P32 million in VAT for his earnings in 2008 to 2009 for endorsing 14 products, including Ginebra San Miguel and United Laboratories.
